Belgium provides a VAT exemption for transport services directly related to the export of goods from Belgium or another EU member state to a place outside the VAT territory of the European Union. Transport companies that carry out such transport directly for exporters of goods or also in subcontracting for other transport companies, can today exempt their services from VAT based on this provision.
However, following an important decision of the Court of Justice, this VAT exemption can only be applied in the relationship transport company - exporter of the goods and not in any previous relationship, i.e. if the transport company uses a subcontractor for the transport. If a transport company uses a subcontractor to carry out the transport of goods, this service provided by the subcontractor cannot be exempted from VAT.
Despite the fact that this ruling already dates back to 2017, the Belgian VAT administration is only now changing its position regarding this provision and such services from 01/01/2022 will no longer be able to benefit from the VAT exemption.
An example to clarify:
A Belgian taxable company A has sold goods to a customer established in the United Kingdom (country established outside the EU). A uses transport company X to transport the goods to its customer, i.e. it is an export. X in turn relies on transport company Y to provide the transport service. Transport companies X and Y are both Belgian taxable companies.
The transport service that Y provides to X as a subcontractor is subject to 21% Belgian VAT as of 01/01/2022. Until this date, the VAT exemption of article 41, §1, first paragraph, 3° of the VAT Code applies.
The transport service provided by X to A is also subject to Belgian VAT, but is exempted on the basis of article 41, §1, first paragraph, 3° of the VAT Code.
Do you have questions about the end of the VAT exemption? Then contact us here.